- 35.4.1.1 Introduction
- 35.4.1.2 Raising New Issues in Tax Court Cases
- 35.4.1.3 Coordination with Other Tax Court Cases
- 35.4.1.4 Coordination with Other Counsel Offices
- 35.4.1.5 Coordination with Criminal, Refund, and Collection Cases
- 35.4.1.6 Burden of Proof
- 35.4.1.7 Developing a Trial Preparation Plan
- 35.4.1.8 Ethical Considerations
- 35.4.1.9 The Trial Brief/Trial Folder
- 35.4.1.10 Depositions Before Commencement of Case—T.C. Rule 82
- 35.4.1.11 Potential Security Threats
- 35.4.1.12 Interest Abatement Cases
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The basic goal in preparing to try and trying a case in the Tax Court is to apply the law to the facts. Very simply, this involves:
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Contemplating methods of dealing with disputed facts and potential evidentiary problems
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Integrating the undisputed facts with respondent’s version of the disputed facts
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Creating and presenting a theory that is more plausible and persuasive than petitioner’s
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Ideally, the notice of deficiency or liability or other determination underlying the Tax Court case should contain and explain the proper basis or bases upon which the adjustment or other disputed item is to be litigated. This is not always the case, however. In any event, the answer or amended answer is to be filed, and the case is to be tried, under legal theories and positions that are in accord with the current Service position, regardless of the basis upon which the notice was issued. Any "new issue " should be raised as soon as possible so that full consideration may be given to it in both settlement negotiations and trial preparation.
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A "new issue" is an issue raised in the answer or amended answer which was not one of the adjustments or positions shown in the notice. "New issue" includes all issues which result in increased deficiencies as well as alternative issues or positions conflicting with the adjustments or positions set forth in the notice. The term does not include affirmative pleadings required for issues upon which the burden of proof is placed by statute upon the Service (such as fraud or transferee liability), if shown in the notice; matters alleged for affirmative defense (such as exceptions to the statute of limitations, res judicata, and estoppel); or most matters of further defense such as additional grounds in support of the statutory adjustments, or further defense to positions, theories, or qualifications of fact alleged by the petitioner.
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In general, respondent’s counsel will not raise new issues, unless the grounds are substantial and the potential effect on tax liability is material. "Substantial" is defined as strong, possessing real merit. "Material" is defined as having real importance and great consequence. Grounds for raising a new issue or a new position (alternative issue or position) in support of an original adjustment to the taxpayer’s return usually are considered substantial, if the new issue or new position represents the correct legal theory and position of the Service on the transactions included in the notice. Affirmative issues involving items not included in the notice may be raised in the docketed status of the case, but only if the grounds are substantial, the effect on tax liability is material, and there is a sufficient basis in available facts to sustain the Commissioner’s position on the item.
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At all times during the pendency of the Tax Court case, the Field attorney has the responsibility to find and bring to the reviewer’s attention any new issue necessary for a proper determination of the case in accord with the current Service position, whether or not the issue or position or theory was previously considered by the Division Counsel or Appeals. The Field attorney and reviewer should seek legal advice from APJP, Branch 3 if assistance is needed with any problems encountered in the pleadings or trial of a docketed case, relative to the raising of affirmative issues.
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In some instances, even in docketed cases, it may be necessary to return the case to the originating operating division for further factual development before a decision can be made as to the proper issues to be raised, the proper theories to be advanced, or the proper basis for litigating the adjustment or other item under current Service position. Particular care must be exercised in this area if the case is docketed. Petitioners or their representatives may not be contacted by the examining agent or officer in connection with this further factual development, and no administrative summons should be issued. The examining agent or officer must work under the direction of the Field attorney and the reviewer.
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Normally, new issues should not be raised after the case has been set for trial. The court may be inclined to deny leave to raise it, because petitioner is not likely to have enough time to prepare a defense. If the case is continued, this limitation will no longer apply. An affirmative issue raised by an amended answer filed during the calendared period may well (but does not automatically) result in a continuance of the case, since the petitioner has 45 days in which to reply to the amended answer, and the case may not be at issue at calendar call. In any event, the court usually will not force a trial when the petitioner has not had sufficient time to prepare a defense to the respondent’s affirmative issues.
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Actions taken in one Tax Court case potentially can have direct or indirect impacts on other cases pending in the Tax Court, whether or not the cases involve the same taxpayer.
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TLCATS and CASE-MIS give the Field attorney and reviewer the capability of locating cases involving the same taxpayer and related parties. TLCATS and CASE-MIS should be consulted for such information, and the Field attorney should coordinate with the attorneys assigned to other relevant cases.
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Other attorneys in the Field attorney’s division, and other attorneys throughout the Office of Chief Counsel, can be important sources of information and technical expertise that may be useful to the Field attorney in preparing a case for trial or other appropriate disposition. The Field attorney may also be an important source of information to other Chief Counsel attorneys, both in Field and Associate offices, who are assigned to handle similar issues in a variety of contexts. Counsel attorneys should both seek assistance from, and give assistance to, other Chief Counsel offices.
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The Office of Chief Counsel should speak with one voice. Anything signed or approved by or in the name of the Chief Counsel must represent the position of the entire office and not merely the position of a particular division or part of the office. Disagreements are to be reconciled through established management channels. Field attorneys and Associate office attorneys must coordinate proposed action in one function that may affect litigation or technical positions to be taken by another function. See coordination principles at CCDM 31.1.4.
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This section discusses coordination with criminal, refund and collection cases.
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The policy of the Service is to appropriately balance criminal and civil aspects of a case. See Policy Statement P-4-26. If there is an open criminal tax investigation related to the pending Tax Court case, the criminal case should be protected to the extent possible while at the same time complying with the rules, orders, and directives of the Tax Court. Any prospective action toward settlement or trial preparation must be closely coordinated with the Division Counsel/Associate Chief Counsel (CT) and Criminal Investigation in order to ensure that the potential impact upon the criminal case is thoroughly considered.
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If there is an open criminal tax case related to the pending Tax Court case, the Area Counsel (CT) office currently charged with the related criminal matter must be informed of any significant developments in the Tax Court. Copies of the pleadings, significant motions, requests for discovery or admissions, and responses to requests for discovery or admissions will be furnished to Area Counsel (CT). The Field attorney should also periodically request that any additional information developed or received by Area Counsel (CT) (other than information which may not be disclosed for civil purposes, i.e., certain grand jury or wiretap evidence) be furnished. Area Counsel (CT) should coordinate with DJ if the criminal case is pending in DJ. In this way the offices charged with the civil liability and the criminal matter will each be kept informed of all developments which might affect their cases, and the positions taken in both cases will be consistent.
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At the time of answer, it should be determined whether the Tax Court case should be processed only after the criminal trial. If so, a motion for stay of proceedings should be filed prior to the filing of the answer, if possible. See CCDM 35.4.6.4.1(2).
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If a motion to stay is denied by the court over respondent’s contention that the criminal case should first be resolved, consideration should be given to initiating the discovery and admissions procedure for the purpose of fully developing the nature of the taxpayer’s defense to the fraud allegations. DJ should be advised of this action. Because the taxpayer will have been successful in opposing a motion to stay because of the criminal proceedings, the request for discovery or admissions may place the taxpayer in a position of self-incrimination or claiming the Fifth Amendment. If the claim of Fifth Amendment privilege is asserted and sustained by the court, it will provide a basis for a renewed motion to stay because of the pendency of the criminal proceeding. Otherwise, consideration should be given to a motion for sanctions, including dismissal if appropriate, on the issue with respect to which the taxpayer is declining to respond.
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If, in the course of preparation for trial of the civil case, it is established that facts relied upon in the referral of the criminal case to DJ are incorrect and/or inconsistent with the facts developed in the Tax Court case, the Field attorney should inform the responsible Criminal Investigation office, which will, in turn, inform DJ.
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Additional directives on coordinating Tax Court and Criminal Tax cases are set out at CCDM 35.4.6.4.
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The handling and processing of related Tax Court cases and tax refund suits to their ultimate disposition must be closely coordinated so as to establish a consistent litigation position in all the courts.
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Under some circumstances, when the Tax Court case is to be tried prior to the related tax refund suit, it may be advisable for the Field Counsel to submit to the DJ a statement of the facts proposed to be stipulated, or a statement of the facts proposed to be introduced into evidence in the trial of the Tax Court case. Likewise, in cases in which the tax refund suit is to be tried prior to the Tax Court case, in appropriate instances, it may be advisable for the Field Counsel to forward to the DJ attorney a letter setting forth factors involved in the related Tax Court case which should be borne in mind by the DJ attorney in the trial of the refund suit.
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For directives regarding settlement of related Tax Court and tax refund cases, see CCDM 35.5.3.3.
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Attorneys handling related Tax Court and collection litigation cases should carefully consider the effect any proposed action in one case will have in the related case. If different attorneys, in any operating division or office, are handling related Tax Court and collection litigation cases, they should coordinate with each other. For directives regarding settlement of Tax Court cases and related collection litigation cases, see CCDM 35.5.3.5.
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Non-bankruptcy insolvency proceedings include federal receiverships, state receiverships, state probate proceedings, etc. In non-receivership proceedings, claims for deficiencies in income, estate and gift taxes may be filed. The effect of the allowance of such claims or whether the court has jurisdiction to consider the merits of the claim will vary, depending upon the type of case and the forum. Depending on the timing of the petition in the Tax Court, the court in the insolvency proceeding may have concurrent jurisdiction to consider the merits of the tax. Section 6871(a) generally provides that on the appointment of a receiver for the taxpayer in any federal or state receivership, any deficiency in income, estate, or gift taxes, or in taxes under chapters 41 through 44, may be immediately assessed. Also, section 6871(c) generally provides that a claim for such deficiency may be made to the receivership court despite the pendency of a related Tax Court proceeding, but that no petition may be filed with the Tax Court after the appointment of the receiver. In insolvency proceedings, questions may be raised as to the government’s claim for taxes, either upon the merits of the tax liability or for technical reasons pertaining to the claim itself, such as the timeliness of the proof of claim, the inclusion therein of penalties, priority of the government’s lien, etc.
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When a Tax Court case and a non-bankruptcy insolvency case are pending at the same time, appropriate action should be taken, when feasible, to expedite the disposition of the Tax Court case prior to the conclusion of an insolvency proceeding in which both courts have concurrent jurisdiction. This may involve obtaining the approval of the fiduciary to having the Tax Court determine the tax liability prior to final action in the insolvency case on the government’s claim. Disposing of the Tax Court case prior to the closing of the insolvency case will avoid many problems which may be encountered after the closing of the insolvency case.
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In many instances a question may arise as to who has authority to negotiate settlement or to prosecute the Tax Court case on behalf of the taxpayer. The particular law involved should be researched before making a decision on this point.
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In instances in which it is not practicable or feasible to settle the Tax Court case prior to the disposition of the related insolvency case, and the taxpayer fails to prosecute or proceed as required by the court’s rules or orders, the Tax Court case may be disposed of by moving for dismissal and/or default judgment upon failure to appear when the case is set for trial or other appropriate failure supporting a motion to dismiss.
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For directives regarding settlement of Tax Court cases and related non-bankruptcy insolvency cases, see CCDM 35.5.3.5.1.
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A presumption of correctness attaches to respondent’s determinations that are at issue in Tax Court, placing the burden of production (or of going forward) on petitioners, unless otherwise provided by statute or rule. This presumption is a procedural device which requires petitioner to come forward with enough evidence to support a finding contrary to the determination. Pursuant to T.C. Rule 142(a), the petitioner also bears the burden of proof. This burden is a burden of persuasion that requires petitioner to demonstrate the merits of petitioner’s claim by at least a preponderance of the evidence.
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The Traditional Rule. To rebut respondent’s presumption, petitioner must introduce some substantial evidence tending to show that respondent was wrong. If petitioner satisfies this burden, then the burden of going forward with the evidence will shift to the respondent. Where petitioner has carried the burden of going forward, petitioner must still carry the ultimate burden of proof or persuasion. If petitioner has sustained the burden of going forward, petitioner is entitled to judgment if respondent produces no evidence in support of respondent’s burden of going forward.
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Section 7491(a) places the burden of proof on the Service in any court proceeding involving a factual issue if the taxpayer introduces credible evidence with respect to the factual issue relevant to ascertaining the taxpayer’s tax liability. The Service will have the burden of proof under this section if the taxpayer: (1) complies with all the substantiation requirements of the Code; (2) maintains all the records required by the Code; (3) cooperates with the Service’s reasonable requests for information; and (4) meets certain net worth requirements. The new section applies to income, estate, gift and generation skipping taxes. Corporations, trusts, and partnerships whose net worth exceeds $7,000,000 are not eligible for the benefits of the new section. No net worth limitation is applicable to individuals.
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Section 7491(b) places the burden of proof on the Service in any court proceeding where the Service reconstructs a taxpayer’s income solely through the use of statistical information of unrelated taxpayers. With respect to this subsection, there is no requirement that the taxpayer maintain records or cooperate with the Service.
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Section 7491(c) provides that the Service shall have the burden of production in any court proceeding relating to the appropriateness of applying penalties, additions to tax and additional amounts imposed by the Code to the taxpayer.
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Section 7491 is effective in court proceedings arising in connection with audits beginning after July 22, 1998. Where there is no audit, the amendment applies to tax periods or events beginning after July 22, 1998.
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Even when petitioner must meet both the burden of going forward and the burden of persuasion, if petitioner’s testimony or the testimony of petitioner’s witnesses is uncontradicted, the court generally will believe that testimony. This should be taken into consideration in the evaluation of a settlement or in the determination of whether the case should proceed to trial. An attorney should not rely solely upon cross-examination of the petitioner and petitioner’s witnesses to establish the respondent’s case if there is affirmative evidence available which can be presented on behalf of respondent. Thus, the attorney should develop, to the extent practicable, all affirmative evidence to sustain the Commissioner’s determination, even where petitioner has the burden of proof on the issues. In making this determination, it should be remembered that the so-called burden of proof rule does not mean a great deal in our trials since it does not take much evidence on behalf of the petitioner to shift to the respondent the burden of going forward with the evidence.
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Careful planning and preparation are the keys to appropriate handling of a Tax Court case. The proper trial of a case requires a clear understanding of the issues, the gathering of evidence, and the organization of the evidence as it relates to the issues. This can be achieved best if the Field attorney, as early as the time the answer is prepared, understands what steps must be taken in the case, including use of discovery and admissions, and resolves to follow those steps. The attorney should also consider whether the importance or complexity of the case calls for expedited or special handling.
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The Field attorney’s plan for the case should be reviewed from time to time, and, as circumstances change, changes should be made to the plan.
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Settlement discussions are most effective when a case has been fully developed both factually and legally. Due to practical limitations, however, many docketed cases are referred to Appeals for settlement consideration without full development. See CCDM 35.5.1.4
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Since no answer is required in "S" cases, the Field attorney often does not see the administrative file in a docketed case until Appeals returns the case to Field Counsel for trial preparation or filing of decision documents, or unless the Appeals officer asks for legal advice.
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If the Field attorney has had access to the administrative file, and becomes aware of shortcomings in case development, these concerns and suggestions for remedying the shortcomings and an offer to assist should be made to Appeals when the case is referred to Appeals for settlement consideration. Care should be taken to honor any restrictions on ex parte communications in communications with Appeals.
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In cases in which the Field attorney has not had access to the administrative file, the Field attorney should also make the assigned Appeals officer aware of Counsel’s willingness to assist Appeals in dealing with any shortcomings in case development.
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The Tax Court schedules almost all cases for trial in the order of their filing of their petition, taking into consideration the designated place of trial and the court’s schedule of sessions. In regular cases, trial notices are generally are issued to the parties at least five months prior to the date of the scheduled trial session. In "S" cases, trial notices are generally issued to the parties at least two months prior to the date of the scheduled trial session.
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The court may be reluctant to add cases to the calendar after it is issued. If, however, there are uncalendared cases designated for the same place of trial that are related to cases on the calendar, a motion should be filed to have those cases added to the calendar and consolidated with the calendared cases for trial. If circumstances warrant, other cases may be the subject of a motion to calendar for trial. The motion should clearly indicate the number of trial hours that will be added as a result of the case being calendared.
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In large or complex cases, it is often not possible or appropriate for only one Field attorney to handle all of the work connected to the case. In such cases, it is appropriate to form a trial team, that may include paralegals or other personnel in addition to attorneys. In this way, the respondent benefits from the various skills of all members of the team.
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Even in smaller or less complex cases, it may be appropriate for a variety of reasons to form a trial team. This arrangement often could provide training or mentoring to less experienced attorneys.
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Practitioners in the Tax Court, including Chief Counsel attorneys, are required to carry on their practice in accordance with the letter and spirit of the Model Rules of Professional Conduct of the American Bar Association. T.C. Rule 201(a). See CCDM 39.1.1.3 Employee Conduct and Ethics.
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Field attorneys also are required to follow the requirements of Executive Order 12988 on Civil Justice Reform, which encourages voluntary dispute resolution, limits the unnecessary use of discovery, and requires that the use of sanctions be prudent. See CCDM 31.1.1.1.3 Principles of Litigation at paragraph (4) and CCDM 31.1.1.2.4 Sanctions and Attorneys Fees.
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Conflicts of interest for petitioner’s counsel and related ethical issues may appear in a number of forms, such as:
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The attorney has business connections with a person who is not a party to the case (such as a tax shelter promoter), and that person’s interests do or potentially could conflict with petitioner’s interests
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The attorney represents more than one petitioner, and the interests of the petitioners do or could potentially conflict
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The attorney is to be called as a witness for either the petitioner or the respondent
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T.C. Rule 24(g) provides that if any counsel of record was involved in planning or promoting a transaction, or operating an entity, that is connected to any issue in the case, or represents more than one person with differing interests with respect to any issue in a case, such counsel must either secure the informed consent of the client, withdraw from the case, or take whatever other steps are necessary to obviate a conflict of interest or other violation of the ABA Model Rules of Professional Conduct, particularly Rules 1.7, 1.8 and 3.7. The court may inquire into the circumstances of counsel’s employment in order to deter such violations. See T.C. Rule 201.
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In appropriate cases, the Field attorney should seek assurances from petitioners’ counsel that a potential conflict of interest has been resolved. Where a conflict of interest is not addressed, a petitioner may later attempt to be relieved from an adverse settlement or judgment on the grounds of the conflict. On occasion, courts have overturned entered decisions because of defects in representation.
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Notice to petitioner’s counsel should be by letter. The letter should advise petitioner’s counsel of the conflict, and request that petitioner’s counsel secure the informed consent of the client, withdraw from the case, or take whatever other steps are necessary to obviate a conflict of interest or other violation of the rules. A sample letter, addressed to opposing counsel, for use in this situation is set forth in Exhibit 35.11.1–76. This conflict letter must be reviewed in APJP, Branch 3 and approved by the Associate Chief Counsel (P&A), who serves as the Sanctions Officer, before it is mailed to petitioner’s counsel. Depending on the facts of the case, it may be appropriate to insert additional or other language into the letter. If petitioner’s counsel does none of the things suggested by T.C. Rule 24(g), the matter may be brought to the court’s attention, either informally via a conference call with the judge or formally through a motion to disqualify opposing counsel.
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Whether and how to proceed in the face of petitioner’s counsel’s failure to address or resolve the conflict depends on a weighing of all factors, including the nature of opposing counsel’s response and the apparent severity of the conflict. Field Counsel must consult with APJP, Branch 3 before filing a motion to disqualify, and all motions to disqualify must be approved by the Sanctions Officer before they are filed.
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ABA Model Rule 1.7 may be violated if one practitioner represents both spouses where the underlying deficiency is contested and a claim under section 6015 is asserted or available, or one petitioner claims that he or she signed the return under duress by the other spouse, invalidating the joint election. For a sample letter to pettiioner’s counsel for use in this situation, see Exhibit 35.11.1–77.
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In addition to the procedures set forth in CCDM 35.10.2.2.3 et seq., these cases must involve a high degree of participation and review by a reviewer of GS-15 grade or higher. This participation and review are required not only for cases in which the taxpayer has actually raised a claim for relief on these grounds, but also for any case in which facts known to the Field attorney (or paralegal professional) assigned to the case indicate that such a claim might be well-founded.
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In reviewing the position to be presented in Tax Court in a case involving a claim for relief from joint and several liability or duress, the reviewer should evaluate whether relief would comport with the letter and spirit of the Code, the case law governing claims of duress, and principles of sound tax administration. If the relief from joint and several liability or duress claim is not conceded or settled, the reviewer must place a memorandum in the file explaining why the case should go to trial.
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A Grade 15 manager (or other specially assigned reviewer of an "S" calendar) must attend the trial of any relief from joint and several liability or duress case. This may or may not be the same manager who has previously reviewed and approved the file. Following the conclusion of the trial, the reviewer should again evaluate whether relief is warranted, and should document such conclusion in the file.
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If the Field attorney anticipates calling petitioner’s counsel as a witness, such counsel is generally prohibited from representing petitioner in the proceeding. T.C. Rule 24(f); ABA Model Rule 3.7(a). Informed consent of the client is not available to resolve this conflict. It is important for the Field attorney to raise the conflict of interest issue promptly to ensure that the Court does not view respondent’s intended use of petitioner’s counsel as a witness as a prejudicial trial tactic.
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In no event may the Field attorney list opposing counsel as a potential witness in the trial memorandum without prior notice to petitioner’s counsel or prior to compliance with the Sanctions Officer review and approval procedures outlined herein.
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Notice to petitioner’s counsel must be by letter. The letter should advise petitioner’s counsel of the conflict, and request that petitioner’s counsel withdraw from the representation. If opposing counsel does not withdraw, the matter must be brought to the court’s attention. See T.C. Rule 24(g). A sample letter, addressed to opposing counsel, for use in this situation is set forth in Exhibit 35.11.1–78.
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Because all matters involving potential conflicts of interest may lead to a request that some form of sanctions be imposed against an opposing counsel, the provisions of the Civil Justice Reform Executive Order apply. See CCDM 35.10.2.2.3.
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Prior to mailing a letter to petitioner’s counsel warning of a potential conflict of interest or filing a motion to disqualify opposing counsel because of a conflict of interest, Field Counsel must forward the letter or motion, along with a memorandum outlining the background of the case, to APJP, Branch 3 for review. If the matter raises a substantial, nonroutine issue arising under the ABA Model Rules, APJP will coordinate the matter with the Associate Chief Counsel (GLS), for review and approval of any recommended action or additional correspondence. All proposed actions or proposed additional correspondence must be approved by the Associate Chief Counsel (P&A) who serves as Sanctions Officer.
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No matter how simple or complex a case is or seems, the Field attorney must have an effective way to organize planning and presentation of the case. For most attorneys, a "trial brief" or " trial folder" will work well.
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The trial brief serves many purposes, such as:
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Ensures that the attorney will present to the court all theories of the case
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Assists adequate trial preparation in that it obliges the attorney to consider the facts of the case and how to get those facts into evidence
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Highlights any gaps in the case which must be filled
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Requires a study of the applicable legal authorities
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The trial brief should reflect a clear understanding of the issues and should marshal the evidence so as to indicate the effect of such evidence and the issue to which it pertains. In addition, the trial brief acts as a log showing the attorney’s preparation and whether other work should be done before the case will be ready for trial. The trial brief also serves as a ready reference during the trial of the case so that the attorney may check on the points intended to be covered in the presentation.
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Trial briefs are for the use of the attorney and should be structured in whatever manner is most useful, practical, and helpful to the attorney for the type of case involved. The form of the trial brief is immaterial. Some may prefer 3-ring binders with dividers, while others refer individual folders placed inside other folders, while others may use different structures. It is the substance and help to the attorney which it renders which is important. A suggested organization for the Trial Brief/Trial Folder follows:
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The Preliminary Section should contain information pertaining to:
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The caption of the case
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Information regarding the type of taxpayer—individual, corporation, partnership, trust, estate, transferee, etc.
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The legal residence of a non-corporate petitioner or the principal place of business or principal office or agency of the corporate petitioner on the date the petition was filed with the Tax Court
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The name, address, and telephone number of petitioner’s attorney or the pro se petitioner
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The tax, years, and amounts involved, including references to amounts of the deficiencies, penalties, and overpayments and the status of such items, i.e., whether they have been assessed by jeopardy or on waiver of restrictions. This section should also indicate whether payment has been made, not only of the deficiency but also of the tax shown on the return and any previous assessments. Whether an adequate transcript of account has been secured should be indicated
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The jurisdiction of the Tax Court
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The Motions Section should contain information pertaining to any necessary or potential motions, such as for amendments to the answer or to eliminate years and taxes not properly before the Tax Court.
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The Issues Section should contain a statement of the issues before the court. They should be concisely stated in separately numbered paragraphs. Issues raised in the petition should be stated first, followed by issues raised in the answer. A notation should be made of each issue eliminated by concession, abandonment, or settlement stating the document in the file indicating that the issue was eliminated.
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The Prospective Issues Section should list prospective issues which the Field attorney has reason to believe may be raised by an amended petition or which respondent may raise in the alternative or by an amended answer to conform the pleadings to the proof. In this section, any potential issue of the statute of limitations should be listed.
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The Theory of the Case Section. As to each issue involved, the trial brief/trial folder should set forth concisely the legal theory upon which respondent relies. It should be periodically reviewed to ensure that it is current as to issues, facts, and positions, taken by both petitioner and respondent.
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Proof of Facts—Uncontested Facts—Section. Facts established by the pleadings and facts subject to stipulation should be briefly listed in separate categories. Each fact should be separately numbered. Following each fact susceptible to stipulation, there should be added, in parentheses, references to the documentary proof which supports the statement.
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Proof of Facts—Contested Facts Section. Contested facts should be listed either under the issue to which they pertain or in the questions prepared for particular prospective witnesses. There should be a parenthetical reference adjacent to each fact indicating the document, witness, or other source of evidence which will be relied upon to prove such fact. Space should be left for reference to where the fact is established in the record if, after the trial brief is prepared, such fact is stipulated or otherwise established in the record.
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Respondent’s Witnesses Section. The names, addresses, and telephone numbers, if known, of persons whom respondent expects to call as witnesses should be listed. The Field attorney should note briefly the documents and records which the witness is to bring to the trial. Witnesses who are not to be subpoenaed, namely, employees of federal or state agencies, should be listed in a separate group apart from the witnesses who are to be subpoenaed. In a case where an extensive trial will be necessary and several witnesses will be called, it is preferable to list under the name of each witness the points that the attorney expects to cover on examination or cross-examination, or the questions themselves. In relatively simple cases involving only a few witnesses, this portion of the trial brief may be substantially shortened.
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Memorandum of Authorities Section. The statutes, regulations, decisions, and other authority supporting respondent’s position should be listed together with a summary statement of the point for which such authority is to be used. The memorandum could be the basis for a portion of the Trial Memorandum or Memorandum of Points and Authorities. If the judge requests oral argument at the conclusion of the trial, respondent’s Theory of the Case Section and the Legal Authorities Section should provide an adequate outline from which the argument may be made.
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Evidentiary and Procedural Problems Section. Evidentiary and procedural problems which the Field attorney can reasonably anticipate will arise during the trial should be noted. The argument and authorities in support of respondent’s position on the points should then be set forth. This section can serve also as the basis for a portion of the Trial Memorandum or Memorandum of Points and Authorities.
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A person who desires to perpetuate his or her own testimony or that of another person, or to preserve any document or thing that may be recognizable in court, may file an application with the Tax Court to take a deposition, even before a notice of deficiency is issued or other determination is made. Under the language of T.C. Rule 82, the use of a deposition in anticipation of becoming a party to a Tax Court action is not restricted solely to a potential petitioner; it is literally available to the respondent as well. Although this rule has been used by respondent rarely, it is possible, for example, that if during the pendency of an examination it appears that an essential witness in any prospective court action may be unavailable (for example, a revenue agent develops a terminal illness), that the Service could proceed under T.C. Rule 82 to perpetuate the agent’s testimony.
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The application under Rule 82 is entered upon a special docket, and service and pleading with respect to the application will proceed subject to the requirements otherwise applicable to a motion. See T.C. Rules 50–55. A hearing on the application may be required by the court. The case is docketed with a single digit prefix, followed by the two digit year indicator and a "D" designation, e.g., 1–03D.
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If the court is satisfied that the perpetuation of the testimony or the preservation of the document or thing may prevent a failure or delay of justice, it will make an order authorizing the deposition and including such other terms and conditions as it may deem appropriate, consistent with the rules. If the deposition is taken, and if thereafter the expected case is commenced in the Tax Court, the deposition may be used in that case subject to the rules which would apply if the deposition had been taken after commencement of the case. See CCDM 35.4.4.5.2.2 and CCDM 35.4.4.5.2.7.
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Since the application by a potential petitioner may be filed before the Field attorney has any knowledge of the case at all, it is important that, as soon as Field Counsel learns of any such application (or is advised that one will be filed), the Field attorney should start to assemble the background files so that an adequate response to the application, as well as participation in the deposition itself, may be accomplished.
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The Field attorney must be prepared at the deposition to raise any available defense based on privilege. See CCDM 35.4.6.3.3.
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The safety of the employees of the Office of Chief Counsel and of the Service is of the highest priority. In any contacts with a taxpayer or witness, the Field attorney should be sensitive to signs that a threat is being, or may be, posed to the attorney or any other Chief Counsel or Service employee.
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Signs that a threat is being, or may be, posed, include:
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A physical assault on a Chief Counsel or Service employees
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A show of weapons to a Chief Counsel or Service employee
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A specific threat of bodily harm to a Chief Counsel or Service employee
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A use of animals to threaten or intimidate Service or Chief Counsel employees
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Actions similar to those listed above against employees of other governmental agencies at federal, state, county, or local levels
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The Service classifies certain taxpayers as "Potentially Dangerous Taxpayers" ; Counsel more broadly refers to " potentially dangerous persons" to include other individuals such as witnesses. See IRM 5.1.3. If the petitioner is classified as a PDT, or if the Field attorney perceives a threat, a request may be made to Criminal Investigation to provide an armed escort or other security arrangement for meetings with the taxpayer. Armed Service employees do not, however, provide security during courtroom proceedings; instead, that function is performed, at the request of the Tax Court, by the United States Marshals Service.
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Any current threat or assault by a taxpayer should be reported in accordance with local safety and security procedures. If not made to TIGTA at the time of the threat or assault, a report should be made to TIGTA as soon as possible.
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For procedures on reporting Potentially Dangerous Persons to the Tax Court, see CCDM 35.6.3.
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The Tax Court’s jurisdiction over claims to abate interest is explained at CCDM 35.1.1.9.
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Interest abatement cases are somewhat unique in that, due to the nature of the issue presented (involving the reasons, if any, for delay of certain Service actions), the respondent usually has better control over the facts than does petitioner. As a result, most of the witnesses to be contacted and the evidence to be discovered will be within the Service and its files. See CCDM 35.4.2.2.
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The Field attorney should carefully coordinate interest abatement cases with APJP Branch 3. See CCDM 35.2.1.1.10.